The objective of this study is to enhance our understanding of the pricing mechanism in the food distribution industry in Jamaica. The study became relevant because of the general public perception that prices of food items in Jamaica rise faster than they fall – a phenomenon which often is referred to as asymmetric price transmission (APT) and for which economists have offered multiple alternative explanations. We explore whether and the extent to which the pricing strategies employed in the distributive trade in Jamaica are consistent with the four explanations which have been most prominently researched. To accomplish this, we rely on mainly the opinion of businesses operating at various segments (i.e. importation, production, distribution, wholesale and retail) of the distributive trade. We also utilised price data collected at the wholesale and retail segments of the trade. Based on our analysis of the preliminary data, we conclude that APT in Jamaica may be explained by (i) anticompetitive conduct at the retail level – in the form of coordinated conduct by some retailers; and (ii) relative uncertainties in a key economic variable – in the form of instability in the foreign exchange market. These results are necessarily preliminary and, as such, more forensic analysis must be undertaken to confirm their validity.
A simple but powerful economic model is utilized to characterize the main features of the Jamaican cement Industry; and to isolate the effect of changes in import tariffs/duties on the domestic price of cement. The monopoly producer, Caribbean Cement Company Limited (CCCL), generated approximately $694 million less revenue because competitive forces, stimulated by the waiver of safeguard measures, constrained CCCL’s ability to profitably increase the domestic price of cement. Price levels were estimated to be, on average, 3 percent lower than what they likely would have been had the measures not been waived.
In response to a Directive from the Minister of Industry, Technology, Energy and Commerce Honorable Phillip Paulwell, the Fair Trading Commission in collaboration with the Office of Utilities Regulation conducted a review of the telecommunications sector. The review assesses how adequate the current regulatory framework has been in achieving the Government’s stated objectives. It takes account of the development of the telecommunications sector over the past six years and future market developments which are expected to affect competition in the sector. The scope of this review is wide; and it has considered consumer issues as well as competition issues.
The review sought to answer the following questions:
- How has the sector performed in the post-liberalization period?
- How satisfied are consumers with their suppliers and the range of their service offerings?
- What are the threats to the competitive provisioning of telecommunications services?
The above issues are considered for four important segments within the telecommunications sector; the local fixed voice and access, mobile, Internet and international segments. These segments constitute the majority of the telecommunications industry and trends within them have profound impacts on end-users and the general industry structure.
In August 2005, the Ottawa-based International Development Research Centre (IDRC) issued a call for proposals to study competition issues in the distribution sector in developing countries. The IDRC offered ten grants of up to CAD 50,000 each to support research efforts by competition authorities.
The Fair Trading Commission (FTC) in Jamaica submitted a proposal to study impediments to competition in the distribution of pharmaceuticals in Jamaica, specifically those prescription medications that are used in the treatment of the following five chronic ailments: arthritis, asthma, diabetes, hypertension and high cholesterol.
This study and investigation of the petroleum industry, with particular focus on gasoline retailing, was carried out in response to a Ministerial Directive (Appendix A) issued by the Minister of Commerce, Science and Technology to the FTC pursuant to Sections 5(1)(b) and 9 of the FCA.
The Directive required the FTC to conduct the necessary market research and investigation in order to prepare and later implement a Code of Conduct to govern the relationship between petroleum marketing companies and retailers. In particular, the Directive required the FTC to put in place a Code to regulate the vertical arrangements within the industry, consonant with the provisions of the FCA.
It was mandated by Cabinet that the focus of the Code be the protection of the Jamaican consumers. This was interpreted to mean that the ultimate outcome of the Code is to ensure the lowest possible gasoline prices and the widest possible choice of retail outlets for consumers. The objective of the Code therefore is to maximize consumer welfare subject to retailers’ viability. In other words, the Code should provide for the viability of retailers while at the same time ensure the lowest possible prices and the widest choices for consumers, having regard to the provisions of the FCA.
The FCA does not regulate prices per se. Instead it seeks to ensure that the market conditions necessary for a competitive environment are in place. A competitive market will guarantee that the lowest possible prices and the widest choices are provided by the most efficient suppliers.
The study and investigation were carried out to address the issues raised in the Directive.